/24-7PressRelease/ - LONDON, UK, March 03, 2008 - "The age of cheap credit is at its doom" warned Hector Sants, the head of the Financial Services Authority in an interview on BBC radio on Wednesday. The chief executive of the regulatory body said he is sceptic about financial markets to return to where they were before the global credit crunch which caused chaos across the world financial markets in recent months.
The credit crisis is not confined to the UK alone and throughout the European countries people are witnessing a squeeze in unsecured and secured loan approval. The loan without any security is no more available cheaply. There is little possibility that the UK financial market is going to return to the previous path. "The idea that at some point the loan availability will go back to normalcy, I think, is a misnomer." Added Mr. Sants.
If the finance market comes to normalcy, the new normal will be definitely different from the way that market behaved before the credit crisis. Sants believes that banks will resort to more old-fashioned and straightforward ways of lending, and would retreat from selling complicated financial products which allow them to package and sell as cheap loans. He is afraid that the cost of borrowing for consumers is likely to go up.
The Banks and other financial institutions according to Sants "need to give consideration to how their business models will need to adjust to the changed market situations they have seen,".
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